The Three Essential Contracts Every Entrepreneur Needs

Too many entrepreneurs still rely on handshakes, verbal promises, or even screenshots to hold their business relationships together. The truth is simple: a handshake isn’t enough, and screenshots aren’t a contract. To protect your business, your time, and your money, there are three core agreements every entrepreneur should have in place—no matter your industry or stage of business growth.

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1. Client Agreement (Service Contract)

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What it is:
A legally binding contract between you and your client that outlines the terms of the services or products you provide.

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Why you need it:

• Sets clear expectations on scope, deliverables, timelines, and payment terms.
• Protects you if a client disputes the work, delays payment, or requests a refund.
• Helps avoid misunderstandings that could damage your business relationship.

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Key terms to include:

• Detailed description of services or products.
• Payment schedule and method.
• Term, deadlines, and milestones.
• Cancellation and refund policies.
• Intellectual property ownership (who owns the work you create).
• Termination clauses (how either party can end the contract).
• Dispute resolution process.
• Limitation of liability or limited warranties/disclaimers.
• Amendments/changes.
• Force Majeure clause (acts of God).

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2. Independent Contractor Agreement

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What it is:
A contract between your business and a freelancer or contractor you hire, clarifying that they are not your employee and setting the terms of engagement.

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Why you need it:

• Avoids costly misclassification issues with the IRS or labor departments.
• Clearly defines the scope of work, payment terms, deadlines, and deliverables.
• Protects your business from liability for the contractor’s actions or taxes.
• Establishes who owns any work product or intellectual property created.

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Key terms to include:

• Statement that the contractor is independent, not an employee.
• Description of services or deliverables.
• Payment terms and schedule.
• Confidentiality obligations.
• Intellectual property ownership (who owns the work).
• Termination clause.

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3. Basic Non-Disclosure Agreement (NDA)

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What it is:
A contract that protects your confidential information when you share it with clients, contractors, vendors, or potential partners.

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Why you need it:

• Keeps trade secrets, pricing, strategies, client lists, or other sensitive information private.
• Prevents unauthorized sharing or use of your confidential information.
• Builds trust with collaborators by setting clear confidentiality expectations.

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Key terms to include:

• Definition of what counts as confidential information.
• Obligations of the receiving party to keep information secret.
• Duration of confidentiality (usually 2–5 years).
• Exclusions (information that is public or independently developed).
• Remedies for breach.

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Why These Three?

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Together, these three contracts create a legal safety net that:

• Clearly defines your business relationships.
• Protects your money, time, and intellectual property.
• Reduces the risk of costly disputes or misunderstandings.

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